The world will require over 217,000 solar mini grids at a cumulative cost of $127 billion by 2030 to provide power to half a billion people globally, a report by the World Bank Group has said.

Currently, 48 million people are connected to 21,500 mini grids. At the current pace, only 44,800 new mini grids serving 80 million people will be built by 2030 at an investment of $37 billion.

Mini grids are electric power generation and distribution systems that electrify a remote settlement comprising hundreds or thousands of customers in a town or a city, those completely isolated from the main grid. They supply power to far-placed households, businesses, public institutions, and anchor clients like telecom towers and large agricultural processing units.

As per the World Bank’s projection as part of its Energy Sector Management Assistance Program (ESMAP), there are currently 29,400 mini grids planned, of which 95% are in Africa and South Asia and include 99% of solar photovoltaic (PV) installations providing power access to over 35 million people at the cost of $9 billion.

Image courtesy: World Bank Group and ESMAP

While the cost of power generated from solar mini grids has dropped from $0.55/kWh in 2018 to $0.38/kWh today, an investment of $127 billion would be required to provide solar-powered electricity to 490 million people by 2030 at the least cost, through 217,000 mini grids.

Market drivers

ESMAP recognizes five market drivers to set the minigrid sector on a trajectory to achieve full market potential and universal electrification by the end of the decade.

It highlights that increasing the pace of deployment of solar hybrid mini-grids to 2,000 per country each year by building portfolios of modern mini-grids instead of one-off projects will help increase the power accessibility to remotest geographies in the world.

The study suggests providing half a billion people power access for just $10 per month by lowering the cost of electricity generated from solar hybrid mini grids to $0.20/kWh by 2030.

The World Bank suggests electrifying three million income-generating appliances and machines along with power access to 200,000 schools and clinics, establishing quality service for all communities.

It recognizes there is scope to enable minigrid business environments in certain key countries with limited or low access to power. Per the study, such access can be provided through right-handed and adaptive regulations, supportive policies, and reductions in bureaucratic red tape.

It also suggests leveraging development partner funding and government investment to “crowd in” private-sector finance and raises $127 billion from all sources for mini grids by 2030.

Installed versus Planned Capacity

The World Bank estimates a potential for 50,000 mini grids across 138 countries. However, the total installed capacity of first and second-generation mini grids now stands at 21,400 in five regions, including South and East Asia and Africa, against the 29,300 planned.

India, Afghanistan, Myanmar, Nepal, and China have 14,600 mini grids installed, while the planned installations are 24,900.

Image courtesy: World Bank Group and ESMAP

Of the $29 billion total global investment in mini grids to date, Africa and South Asia saw an investment of $9 billion for their deployment. The World Bank has committed $1.4 billion to mini grids in 31 countries until 2027, while the private sector has invested over $500 million for mini grids in low-income nations since 2013.

Infrastructure Vice President at the World Bank Riccardo Puliti explained, “Now more than ever, solar mini grids are a core solution for closing the energy access gap. The World Bank has been scaling up its support to mini grids as part of helping countries develop comprehensive electrification programs.”

The top three private-sector mini grid developers are Tata Power Renewable Microgrids with 10,000 installed and planned mini grids in India, Husk Power with 5,000 in India and Africa, and OMC Power with 5,000 mini grids across India.

Husk Power recently signed a debt facility of $6 million from the EU- funded Electrification Financing Initiative to implement 80 solar microgrids that will electrify 80 communities in India, benefitting an estimated 60,000 people and connecting nearly 10,000 new customers.

Access to power

Given the current developments, around 930 million people will have to obtain a power connection in the next eight years to achieve Sustainable Development Goal 7. The International Energy Agency (IEA) projects that if the current policies and efforts are ramped up, only 260 million people are likely to get power access by 2030, while 670 million will remain without power, with nine out of ten likely to live in sub-Saharan Africa.

Image courtesy: World Bank Group and ESMAP

Solar mini-grids have become the least-cost way to bring high-quality 24/7 electricity to towns and cities off the grid or experiencing regular power cuts.

As a result of decreasing costs of key components and the emergence of new digital solutions clubbed with growing economies, the deployment of solar mini grids has seen a significant boost from around 50 per country annually in 2018 to over 150, specifically in regions with the lowest rates of power access.

Mini grid operators can manage their systems remotely and paid smart meters enable customers to pay as they use the electricity while connecting 490 million people to solar mini grids would mitigate 1.2 billion tons of carbon dioxide emissions annually.